Correlation Between China Mengniu and Carlsberg
Can any of the company-specific risk be diversified away by investing in both China Mengniu and Carlsberg at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Mengniu and Carlsberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Mengniu Dairy and Carlsberg AS, you can compare the effects of market volatilities on China Mengniu and Carlsberg and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Mengniu with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mengniu and Carlsberg.
Diversification Opportunities for China Mengniu and Carlsberg
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Carlsberg is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Mengniu Dairy and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and China Mengniu is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Mengniu Dairy are associated (or correlated) with Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of China Mengniu i.e., China Mengniu and Carlsberg go up and down completely randomly.
Pair Corralation between China Mengniu and Carlsberg
Assuming the 90 days horizon China Mengniu Dairy is expected to under-perform the Carlsberg. In addition to that, China Mengniu is 1.12 times more volatile than Carlsberg AS. It trades about -0.03 of its total potential returns per unit of risk. Carlsberg AS is currently generating about 0.0 per unit of volatility. If you would invest 12,251 in Carlsberg AS on September 14, 2024 and sell it today you would lose (2,046) from holding Carlsberg AS or give up 16.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Mengniu Dairy vs. Carlsberg AS
Performance |
| Timeline |
| China Mengniu Dairy |
| Carlsberg AS |
China Mengniu and Carlsberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mengniu and Carlsberg
The main advantage of trading using opposite China Mengniu and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mengniu position performs unexpectedly, Carlsberg can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carlsberg will offset losses from the drop in Carlsberg's long position.| China Mengniu vs. Nestle SA ADR | China Mengniu vs. ConAgra Foods | China Mengniu vs. Hormel Foods | China Mengniu vs. Kraft Heinz Co |
| Carlsberg vs. Heineken NV | Carlsberg vs. Anheuser Busch Inbev | Carlsberg vs. Compania Cervecerias Unidas | Carlsberg vs. Boston Beer |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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